CBN Introduces Electronic System To Enhance Transparency In Forex Market

By Oluwakemi Kindness

The Central Bank of Nigeria has announced the introduction of an Electronic Foreign Exchange Matching System aimed at transforming the country’s foreign exchange market.

The new system is set to be operational in the Nigerian Foreign Exchange Market by 1 December 2024, following a two-week test run scheduled from November.

The EFEMS is expected to reshape how foreign exchange transactions are conducted in the interbank market by enhancing transparency and promoting a market-driven exchange rate accessible to the public.

According to a circular by the Director of the Financial Markets Department at the CBN, Omolara O. Duke, the EFEMS will require all authorised dealers to conduct FX transactions using the platform, ensuring that transactions are immediately reflected within the market.

The circular read, “The Central Bank of Nigeria hereby announces the introduction of the Electronic Foreign Exchange Matching System for foreign exchange transactions in the Nigerian Foreign Exchange Market to be implemented no later than 1 December 2024. There will be a two-week test run in November 2024.

“Authorised dealers will subsequently conduct all foreign exchange transactions in the interbank FX market on the Electronic Foreign Exchange Matching System approved by the CBN, where transactions will be reflected immediately.”

The new system comes at a critical time as Nigeria continues to grapple with currency instability and speculative trading, which have contributed to market distortions.

The circular added, “The new system is expected to enhance governance and transparency and facilitate a market-driven exchange rate that will be accessible to the public. This development is expected to reduce speculative activities, eliminate market distortions, and give the CBN improved oversight capabilities to effectively regulate the market.

image credit: businessday.ng